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Holiday Pay. Exempt. Probation Period. We hired a new employee

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Holiday Pay. Exempt. Probation Period.
We hired a new employee on 06/30/09. She was hired as a salary, exempt employee. Our Employee Handbook says employees are not eligible for holiday pay until they have passed their 90 day probation. We closed on 07/03/09 for the 4th of July holiday. She was paid for 32 hrs. If she had passed her probation, she would have been paid for 40. On 07/08/09, she suddenly resigned. She is now demanding holiday pay for the day we closed even though she had not completed her 90 day probation. We have never paid holiday pay in the past to anyone who hadn't ccompleted 90 days. Do we need to pay this because she was salaried exempt? I have gotten conflisting opinions from attorneys Does anyone know the answer to this beyond a doubt? Is this a gray area?

Under federal law, regardless of company policy on holidays and probation periods, an exempt employee cannot be docked pay if they were ready, willing, and able to work, but work was not available (ie; you closed for a holiday).

The only gray area I can think of would be whether the employee was correctly classified as exempt. If the employee was correctly classified then you must pay her full salary for the week.

While I cannot provide legal advice, there can be stiff penalities that accumulate each day when you fail to pay all amounts due to an employee within three days of their termination. I would strongly urge you to make sure that you are meeting all of your obligations to the ex-employee before any additional days elapse.

Also note that if you do dock "exempt" employees in this way you may be creating classification issues, as the statute says,

"An employee is not paid on a salary basis if deductions from the employee's predetermined compensation are made for absences occasioned by the employer or by the operating requirements of the business."

Closing for a holiday at your discretion would be an absence "occasioned by the employer".

I've provided the federal code below with the pertinent section in bold:

29CFR541.602 - Salary basis.

Section Number: 541.602

Section Name: Salary basis.

(a) General rule. An employee will be considered to be paid on a ``salary basis'' within the meaning of these regulations if the employee regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of the employee's compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed.

Subject to the exceptions provided in paragraph (b) of this section, an exempt employee must receive the full salary for any week in which the employee performs any work without regard to the number of days or hours worked. Exempt employees need not be paid for any workweek in which they perform no work. An employee is not paid on a salary basis if deductions from the employee's predetermined compensation are made for absences occasioned by the employer or by the operating requirements of the business. If the employee is ready, willing and able to work, deductions may not be made for time when work is not available. (b) The term ``primary duty'' is defined at Sec. 541.700. In determining the primary duty of an outside sales employee, work performed incidental to and in conjunction with the employee's own outside sales or solicitations, including incidental deliveries and collections, shall be regarded as exempt outside sales work. Other work that furthers the employee's sales efforts also shall be regarded as exempt work including, for example, writing sales reports, updating or revising the employee's sales or display catalogue, planning itineraries and attending sales conferences. (c) The requirements of subpart G (salary requirements) of this part do not apply to the outside sales employees described in this section.Please don't hesitate to let me know if I can provide additional information or clarification._______________If this answer was helpful, please press the green "Accept" button. You are still free to ask additional related follow up questions and I'll be happy to provide further information and clarification.

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